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AB 1

Relating to: an income tax subtraction for qualified tips and for qualified overtime compensation; state aid for school districts; surplus refund payments; increasing funding for special education and school age parents programs; state aid to technical colleges and the technical college district revenue limit; and making an appropriation. (FE)

May 2026 Special Session

Raises education funding (special ed, school-age parents) and adjusts aid/revenue limits for technical colleges, funded by a state appropriation.

Fiscal estimate received
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Bill Summary · AB 1

Summary of AB 1 (2026S1) – Wisconsin

Purpose and overall intent

AB 1 is a comprehensive finance and education–focused bill proposed by the Joint Committee on Finance, at the request of Governor Tony Evers. It seeks to:
- provide an income tax subtraction for qualified tips and for qualified overtime compensation,
- address state aid allocations and surplus refunds,
- increase funding for certain education programs (special education, school-age parents programs),
- adjust state aid mechanisms for technical colleges and the technical college district revenue limit,
- and make an appropriation to support these changes.

In short, the bill aims to bolster education funding, enhance financial supports for workers (through tax policy), and modify related state aid and revenue limits, financed via a state budget appropriation.

Key provisions and changes

  1. Income Tax Subtractions

    • Create or apply a subtraction from gross income for:
      • qualified tips received by workers, and
      • qualified overtime compensation.
    • The provision would reduce taxable income for eligible tip amounts and overtime pay, thereby lowering individual income tax burdens for affected workers.

  2. Education Funding – General

    • Increase state aid and funding levels for specific education programs and initiatives.
    • Targeted enhancements likely include programs related to special education and school-age parents programs, with enhanced appropriations or formulas to grow funding.

  3. Special Education Funding

    • Increase funding for special education services and supports, potentially through higher per-pupil allocations, growth in total appropriations, or adjusted cost-of-service estimates.
    • Aims to better meet special education needs in public schools.

  4. School Age Parents Programs

    • Expand or increase funding for school-age parents programs designed to support students who are parents, helping them remain in school and complete their education.

  5. Technical Colleges and Revenue Limits

    • Adjust state aid to technical colleges and modify the technical college district revenue limit mechanism.
    • Potential changes include revised aid formulas or allowable revenue limits to enhance operating funding for technical colleges.

  6. Appropriation

    • The bill authorizes an appropriation to fund the above enhancements, ensuring the new tax subtraction and education funding changes are financed.
    • Specific dollar amounts and line-item details would be defined in the enacted version, but the framework indicates an overall funding provision aligned with the programmatic increases.

Who is affected

  • Individuals and households who earn qualified tips or qualified overtime pay, who would see a reduction in taxable income and potentially lower income tax liability.
  • Public school students and families through increased dollars for special education and school-age parents programs, improving services and supports.
  • Public school districts and charter schools indirectly, via the education funding changes.
  • Technical colleges and district revenue systems through adjustments to state aid and revenue limits, influencing budgeting and operations.
  • Local governments or taxpayers funding the state budget, as the appropriations determine the fiscal impact.

Procedural and timeline aspects

  • Introduced May 12, 2026, by the Joint Committee on Finance (at the Governor’s request).
  • Public hearing held on May 12, 2026, with committee action:
    • Report passage recommended by the Joint Committee on Finance (Ayes 12, Nos 4).
  • On May 13, 2026, the bill underwent multiple reads and amendments:
    • Assembly Amendment 1 offered and adopted.
    • Passed the Assembly (third reading) with Ayes 61, Nos 32, plus 2 paired.
    • Received from Assembly and messaged to the Senate, with delays and concurrent actions.
    • In the Senate, initial actions included reading, committee consideration, and amendments.
    • On May 13, 2026, the Senate refused concurrence on an earlier version (Ayes 15, Noes 18) and the bill advanced with amended provisions.

Notes on status

  • The bill has progressed through introduction, committee, and floor actions in both chambers, including amendments and passage in the Assembly and ongoing consideration in the Senate. The final, enacted text would be subject to any further Senate actions, reconciliations, and signature by the Governor.

Potential impact considerations

  • Taxpayers with tip income or overtime pay could see tax savings due to the income tax subtraction.
  • Education systems may experience increased funding for special education and programs supporting school-age parents, potentially improving student outcomes and educational attainment.
  • Technical colleges would receive adjusted funding and revenue framework changes, affecting budgeting and capacity.
  • Overall state budgets would reflect the associated appropriation to finance these changes, influencing next-year fiscal conditions and state spending priorities.

Compiled from official sources — confirm details with the bill’s official record.

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